Borealis (Vienna, Austria) has declined EuroChem’s (Zug, Switzerland) €455-million ($500 million) binding offer to acquire its nitrogen business, citing the war in Ukraine and EU sanctions. Russian businessman Andrey Melnichenko, who owns a 90% stake in EuroСhem, was placed on the EU’s sanctions list on Wednesday in response to Russia’s invasion of Ukraine.
“We have closely assessed the most recent developments around the war in the Ukraine and sanctions that have been put in place,” says Thomas Gangl, CEO of Borealis. “As a consequence, we have decided to decline EuroChem’s offer for the acquisition of Borealis’ nitrogen business, including fertilizer, melamine, and technical nitrogen products,” he says.
Borealis says it will “consider various options” regarding the future of the nitrogen business.
EuroChem announced in a separate statement Thursday that Melnichenko has resigned his position as non-executive director, and has also withdrawn as main beneficiary, effective 9 March. EuroChem did not provide details on how Melnichenko’s stake would be restructured.
In February Borealis and fertilizer producer Eurochem entered into exclusive talks following a binding offer from Eurochem for the nitrogen business. The transaction was expected to close in the second half of the year. Borealis announced in February last year it had started a process aimed at divesting the nitrogen business unit.
Gangl told CW in February the sale of the fertilizer business was an “important next step … to go to a company that’s fully focused on the business.” The fourth quarter had been “an extremely good one in the nitrogen business because they adapted to the prices,” he said, referring to high gas prices at that time. He also described the proposed transaction value as “a fair price.”
The Borealis nitrogen business had sales volumes in 2020 of 3.9 million metric tons, including 800,000 metric tons of technical nitrogen solutions and 150,000 metric tons of melamine, with total 2020 revenue of €908 million.
The transaction would have seen EuroChem acquire five production facilities in Europe, as well as a full sales and distribution network. Borealis has three production plants in France, one in Austria, and one in Germany.
EuroChem has key manufacturing facilities in Russia, Belgium, Kazakhstan, and Lithuania, recently launching a project to build a 1.0-million metric tons/year (MMt/y) ammonia plant and 1.4-MMt/y urea plant at Kingisepp, Russia. EuroChem started up a 1.0-MMt/y ammonia plant at Kingisepp in mid-2019, and is also working on the first and second phases of its Usolskiy, Russia, potash mine.
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